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Can their retirement savings cover them and their special needs son?

The Zupans at their Fairfax County home in September. From left, Josef, Mike, Elshaday and Nicole. (Bill O’Leary/The Washington Post)

As Nicole and Mike Zupan get closer to retirement, they worry about more than just covering their own living expenses for the next several decades.

They want to set aside enough money for their 15-year-old son, Josef, who is autistic and may never be able to live on his own. Their idea of retirement is to live a quiet life close to their son, who may need to move into a group home when he gets older. They want to create a special needs trust to help pay for therapy and other expenses he might face as an adult.

“Because of our son’s needs, I guess I never really considered true retirement for us,” she says.

They’re also trying to save for their 14-year-old daughter, Elshaday, to attend college in a few years.

The Zupans’ ideal plan is for Mike, 60, to retire first, in five to seven years, and for Nicole, 52, to continue working for several years beyond that before she joins him in retirement.

But before they can get there, they want to pay off the $18,000 in credit card debt they’ve racked up, partly because their son’s therapy is not covered by insurance. They have about $230,000 left on the mortgage for their home in Fairfax County, Va., which they estimate will take about 12 years to pay off, and a $14,000 loan they used on home improvements.

Matters are complicated by the fact that Nicole, who worked as a preschool teacher, is now unemployed while she recovers from foot surgery. It could be a few weeks before she can return to the workforce. Mike’s $120,000 income, which he earns as a government contractor, is enough to cover their basic living expenses. But Nicole wants to get back to work so the family could afford more therapy for Josef and pay down their debt faster. They also would be able to save more for their long-term goals, including retirement, their daughter’s college tuition and their son’s future living expenses.

We shared details of their finances with two financial experts, Sarah Halpin, a financial planner with Wells Fargo Advisors, and John Voltaggio, a senior wealth adviser at Northern Trust.

The bigger picture

The Zupans have about $200,000 in equity on their home and about $575,000 in their retirement account. Currently, they have about $12,000 in emergency savings and close to $22,000 total in 529 plans for their children’s education. Nicole expects that Josef will be able to stay in public school until he turns 22 because of his autism. Since it’s unlikely that Josef will go to college, they want guidance on how best to use a portion of his savings.

The family hopes Josef will qualify for federal or state aid that can help him move into a group home, but his state aid may be limited. Josef is one of 10,000 people with disabilities in Virginia on a wait list for Medicaid vouchers that should help pay for care, Nicole says.

The Zupans spend about $8,300 a month on their regular bills, savings and debt payments. That includes $2,600 for their mortgage and property taxes, an average $200 on electricity, and about $330 on cable, Internet and phone service. Their insurance bills, including long-term care insurance, health coverage, and car and home insurance, add up to $800 a month, and Josef’s therapy costs $585 a month. Their transportation costs, which include a car payment, gas and parking, total $700 a month. Charitable donations and savings total up to about $400 a month. They spend about $900 on groceries and $800 on miscellaneous expenses, including entertainment, a gym membership and home maintenance.

They also put about $1,000 toward their debt each month, including a $350 minimum credit card payment, $275 for an interest-free furniture loan and $350 in extra payments they make to clear their debt more quickly. They paid off a chunk of their credit card debt using some money they had inherited. Now the Zupans wonder if it’s best to use the $12,500 they have left from the modest inheritance to make another dent in their debt or to build up their savings.

Setting priorities

While the parents may want to set aside more money for their daughter’s college fund or for a special needs trust for their son, they should focus on their retirement savings first, the advisers say. Because they expect to live close to their son and to help pay for his expenses even after they stop working, building up their retirement fund will help them be financially secure in the long run, Voltaggio says. “They can just keep the money and help their son on an as-needed basis,” he says.

To start, the couple should contribute $6,500 a year to Mike’s Individual Retirement Account, which is the maximum allowed for savers age 50 and up and nearly double the amount they are saving now.

Then they should focus on paying off their debt, Voltaggio says. They can use the $12,500 left of the inheritance to pay off the bulk of their credit card debt, which is growing at a 9 percent interest rate. The roughly $5,500 in debt they would have left should be transferred to a card with a lower rate to make their payments go further, he says.

Once Nicole lands a job, they can use her paycheck to make extra payments on their credit card debt. After the card is paid off, they can direct the money that was going to their credit card payments toward the $14,000 loan they used to renovate their bathroom, which is at a lower 3 percent interest rate, the advisers say. Once that loan is paid, the Zupans could use the money that was going to that to build up their emergency fund until they have enough savings to cover one year’s worth of bills. That stash could give them a cushion if any surprise expenses appear. Then they can focus on adding money to their children’s 529 plans.

Halpin offered an alternative plan for how to use the remainder of the inheritance. She says the Zupans may want to hold on to it to pad their emergency savings fund until Nicole is able to go back to work. Without it, the $12,000 they have in emergency savings now may only be enough to cover their fixed expenses, such as housing and utility costs, for about three months.

Doubling their savings to $24,500 could leave them with enough cash to pay their essential bills for at least six months should Mike lose his job or if Nicole’s job search takes longer than expected (though their debt would still be accruing interest). Once Nicole has a steady paycheck, she can use her income to make more aggressive payments on their debts, she says.

Crafting a comfortable retirement

After paying off their debt, the couple should increase their retirement savings as much as possible. Nicole will be able to save more for retirement once she lands a job, either by contributing an additional $6,500 to her Roth IRA or by saving in a 401(k) if her new employer offers one.

Delaying retirement for as long as possible would also set them up to have more income for supporting the family, the advisers say. While Mike would like to retire in about seven years, he should consider working until at least age 70, Voltaggio says. At that point, they would have only two years left on their mortgage, and Mike would be able to receive his maximum Social Security benefit of about $3,500 a month, greater than the estimated $2,600 a month he would receive at age 66. That’s $900 more in additional monthly income to pad whatever pay Nicole might be earning during that time. Nicole, who plans to work as long as she can, could see her monthly Social Security benefits grow to $1,580 at age 70 from $1,240 at 67.

Any retirement savings they don’t use can be left to their children through their will, he recommended. They can leave instructions in their estate plan to put any inheritance they leave for Josef into a special needs trust, which would be used to pay for therapy and other caregiving expenses not covered by government aid, Halpin says.

And if Josef doesn’t go to college or use the money for training at a community college, the Zupans can transfer the money in his 529 account to their daughter’s name to pay for her tuition costs, Halpin says.

In Finance Lab, we pair frustrated readers with financial advisers. Want to participate? Tell us your story or e-mail us at


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